Observation Deck: Choices to be Made

More than 13 years after President Clinton unveiled a plan to provide universal healthcare coverage for all Americans, and just slightly less than that before the plan was torpedoed, healthcare as a matter of public policy is front and center, again. After the Clinton plan collapsed, many in the industry breathed a sigh of relief. The heat was off, government had backed down, the private sector could go about mending healthcare’s ills. It hasn’t worked out that way.

Here we are in 2007 – more than a year away from an election – and everybody’s talking about healthcare. Meanwhile, healthcare costs keep climbing. Some predict healthcare will consume 20 percent of our gross domestic product by 2016.

To be sure, healthcare in the United States is a wonderful thing to see in action. The people, the technologies and the passion of caregivers are second to none. But is there a limit to how much we can spend?

Five to 10 years ago, the public was blasting HMOs for their crude, artificial attempts to limit access to care. The word “gatekeeper” became much maligned. Yet today, the concept lives on, though in a somewhat different form. The Minnesota Medical Association recently issued a public appeal for an end to requirements that physicians “consult” with a third-party vendor before ordering high-tech imaging procedures, such as CT, MRI and PET scans. Insurers in Minnesota, including Medica, HealthPartners and Blue Cross, have been ordering the “consultations” as a way to put the skids on expensive imaging procedures. The doctors only see it as meddling.

There are those who believe that, with some hard work, we can lower healthcare delivery costs and improve care. About a year ago, Premier’s Hospital Quality Incentive Demonstration pay-for-performance project, conducted with the Centers for Medicare and Medicaid Services, showed that improving patient care can save lives and reduce costs. Premier’s analysis showed that if all pneumonia and heart bypass patients nationally had received most of a set of basic, widely accepted care measures in 2004, there would have been an estimated 3,000 fewer deaths; 6,000 fewer complications; 6,000 fewer readmissions and 500,000 fewer days in the hospital. The bonus: Costs would have been as much as $1 billion lower.

Assuming that hospitals implement these care measures and that they cut down the usage of high-tech imaging, they still have to deal with one problem: If reimbursement policies remain unchanged, they’ll go bankrupt … at which point the discussion about healthcare reform becomes somewhat academic.

A recent article in The Wall Street Journal illustrated the dilemma – and a potential solution. Working with its medical staff, Aetna Inc. and one of the big local employers (Starbucks), Virginia Mason Medical Center in Seattle made some big moves to cut its costs – and improve care. For example, rather than immediately sending people with back pain for an MRI, the medical center turned the care process around by referring most back-pain patients for physical therapy before anything else. If the pain persisted, an MRI was prescribed. Within a year, the percentage of people receiving MRIs dropped by a third. And care was improved.

The problem was, the spine clinic’s income fell from a profit of about $100 per case to a loss of about $200, according to the article. You see the problem. So did medical center officials and Annette King, Starbucks’ benefit manager, who is quoted as saying “It was pretty clear right away, we couldn’t let that happen.”

The solution: Aetna agreed to increase the medical center’s physical therapy reimbursement by about 16 percent. Most everybody wins – patient, insurer, and the employers who are paying the bills. (In this case, the only loser was the medical center’s state-of-the-art chronic pain center, which lost 15 of its medical staff as resources were shifted away from it.)

Will there be a universal healthcare plan? Or will reform be carried out on a small scale in localities across the country, as it was in Seattle? Either way, the solution will call on some hard, conscientious work by all of us. I suppose that’s what makes this industry so interesting.

Mark Thill is the Editor of The Journal of Healthcare Contracting and has been reporting on healthcare supply chain issues since 1985. He is a graduate of Dominican University in River Forest, Ill., and he received a master's degree in journalism from Northwestern University in Evanston, Ill.